Friday, September 9, 2011

Appeals Court Dismisses Virginia's ACA Challenge

In two separate cases decided on September 8, the Fourth Circuit U.S. Court of Appeals dismissed challenges to the Patient Protection and Affordable Care Act (ACA). In both cases, rather than ruling on the merits of the ACA itself, the court ruled that plaintiffs did not have standing to sue.

In Commonwealth of Virginia v. Kathleen Sebelius (No. 11-1057) in which the ACA's individual mandate was declared unconstitutional by a district court, a three-judge panel in the Fourth Circuit ruled unanimously that Virginia lacked standing to sue. Thus, the court vacated the judgment of the district court and sent the case back with instructions to dismiss the case.

Virginia contended that Congress lacked constitutional authority to enact the individual mandate in the ACA. However, noted the court, the individual mandate imposes no obligations on the state of Virginia. Nevertheless, Virginia maintained that it had standing to bring this action because the individual mandate allegedly conflicts with a newly-enacted state statute, the Virginia Health Care Freedom Act (VHCFA) which states that “[n]o resident of this Commonwealth . . . shall be required to obtain or maintain a policy of individual insurance coverage.”

The Fourth Circuit appeals court concluded:

“Contrary to Virginia’s arguments, the mere existence of a state law like the VHCFA does not license a state to mount a judicial challenge to any federal statute with which the state law assertedly conflicts. Rather, only when a federal law interferes with a state’s exercise of its sovereign 'power to create and enforce a legal code' does it inflict on the state the requisite injury-in-fact.”

The Third Circuit Court of Appeals in another case (New Jersey Physicians, Inc., v. President of U.S. (No. 10-460; Aug. 3, 2011)), also found that those challenging the validity of the ACA did not have standing to sue because they could not demonstrate any injury caused by the law.

Liberty University
In a 2-1 decision, the Fourth Circuit also vacated a district court decision that had declared the ACA constitutional.

In Liberty University v. Timothy Geithner (No. 10-2347), the Fourth Circuit based its opinion on the penalty imposed by the ACA if individuals do not purchase insurance. Arguing that the penalty in essence is a form of a tax, the court concludes that a suit cannot be brought against this “tax” because the federal Anti-Injunction Act (AIA) “provides that ‘no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person.’” The court thus vacated the lower court decision because the AIA bars a suit seeking to bar the collection of a tax, despite the fact that neither Liberty University nor the federal government had claimed that the AIA affected the case.

The September 8 decisions are the fourth and fifth appeals court rulings on the ACA. One appeals court has ruled the ACA constitutional, one (the Eleventh Circuit in State of Florida v. U.S. Department of Health and Human Services, et. al., where 26 other states joined Florida) ruled the individual mandate, but not the entire ACA, unconstitutional, while the Sixth Circuit in (Thomas More Law Center, Jann Demars; John Ceci; Steven Hyder; And Salina Hyder, v. Barack Hussein Obama, et al., No. 10-2388) ruled that the individual mandate is “a valid exercise of Congress’s authority under the Constitution's Commerce Clause.” The Sixth and Eleventh Circuit appeals court cases are now in the Supremes’ court.

The September 8 Fourth Circuit opinions are available here.

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.


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